Minnesota-based medtech company, Medtronic Inc., has agreed to pay $2.8 million to resolve allegations that the company promoted its neurostimulator device for unapproved chronic pain treatment. According to the complaint, originally filed by former Medtronic sales rep Jason Nickell, Medtronic sales staff were directed to sell the device at discounted prices to pain management doctors. Nickell also alleged that sales reps promised physicians could “make upward of $10,000 profit on each patient, while adding only minutes to the procedure” by using a billing code meant for an FDA-approved use.
Neurostimulation provides pain relief by blocking pain messages before they reach the brain—instead of pain, patients feel a tingling sensation. According to the complaint, the procedure and intended use of neurostimulation devices at issue, referred to as Sub-Q, subcutaneous targeted neurostimulation (“STN”), or peripheral nerve field stimulation (“PNFS”), was a new application of an older device first developed around 2005 and still in an experimental stage as Medtronic was promoting it.
The complaint was initially filed by Jason Nickell, a former Medtronic sales rep who, as a Medtronic employee, made $600,000 per year selling the neurostimulation devices. The U.S. later joined in. According to Nickell, he quit his job over concerns about the promotional practices and then filed a lawsuit under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. Nickell will receive $602,000—apparently just $2,000 above his yearly salary while selling Medtronic devices.
Nickell alleged that during training, his Medtronic mentor would call doctors and encourage them to use the new neurostimulation technique and bill for an established Medicare code, instead of an “unlisted procedure,” which would have potentially raised red flags.
The complaint states:
On each one of these sales calls, [the Medtronic employee] instructed physicians to bill 64555 (peripheral nerve stimulation) for the placement of the Sub-Q leads. [He] explained to the physicians that they could combine the Sub-Q implants with their epidural implants and make upwards of $10,000 profit on each patient, while adding only minutes to the procedure time.
The United States alleged that from 2007 through 2011, “Medtronic knowingly caused dozens of physicians located throughout more than 20 states to submit claims to Medicare and TRICARE for investigational medical procedures known as SubQ stimulation that were not reimbursable.” Since January 2009, the Justice Department has recovered a total of more than $23.5 billion through False Claims Act cases, with more than $15 billion of that amount recovered in cases involving fraud against federal health care programs. “Targeting chronic pain patients with a medical procedure that lacks evidence of clinical efficacy wastes the country’s health care resources,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.
The settlement with Medtronic was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of New York, the Civil Division’s Commercial Litigation Branch, HHS–OIG, the Defense Health Agency, the FDA’s Office of Chief Counsel and the FDA’s Office of Criminal Investigations.
Medtronic admitted no liability in settling for the $2.8 million. As of 2014 (five years after the initial complaint), the company is the global leader in nueromodulation. “Medtronic employs or is studying neuromodulation technology for multiple uses, including movement and psychiatric disorders, gastric electrical stimulation, targeted drug delivery for chronic pain, spinal cord stimulation and sacral neuromodulation, a treatment for bladder and bowel control that focuses on the sacral nerve,” states Fierce Medical Devices.
Download Relator’s 2009 Complaint: The lawsuit is captioned United States ex rel. Nickell v. Medtronic, Inc. Civ. No. 09 – CV – 0203-S (W.D.N.Y.).